IRS Announces 2017 HSA Guidelines

The IRS recently announced the 2017 Health Saving Accounts (HSA) guidelines for 2017. If you were looking for the opportunity to put more money in your HSA account next year and keep it out of the hands of the IRS, you might be a bit disappointed.

Brief Background on Health Saving Accounts

Health Savings Accounts (HSAs) were established in 2003 as a means for Americans to take control of their own health care. An HSA combines an interest bearing savings account with a high-deductible health plan.

Benefits of an HSA

• Contributions are tax-deductible
• Money invested grows tax-deferred
• Withdrawals for qualified medical expenses are tax free

Those benefits alone make Health Savings Accounts a very powerful investment vehicle to help avoid the tax man. Some experts argue that the benefits of an HSA outweigh the benefits of traditional retirement plans such as an IRA or a 401K. See this article: Is an HSA Better than a 401k?

Federal regulations require HSA owners to comply with the IRS guidelines regarding how much money can be deposited within a given year.

These guidelines are inflation adjusted each year and apply to contributions, deductibles, and out-of-pocket spending limits for HSAs and high-deductible health plans (HDHPs).

2017 HSA and HDHP Contribution Limits

Except for the annual contribution limit for individual coverage, which increased a mere $50 from $3,350 in 2016 to $3,400 in 2017, all other deductible, out-of-pocket and annual contribution limits remain unchanged in 2017.

2017 Individual Coverage:

Annual contribution limits are $3,400 – Up $50 from 2016
Annual deductibles must be at least $1,300 – no change from 2016
Annual out-of-pocket limits are capped at $6,550 – no change from 2016

2017 Family Coverage:

The annual contribution limits are $6,750 – no change from 2016
Annual deductible is $2,600 – no change from 2016
The maximum out-of-pocket limit is $13,100 – no change from 2016

Employees can make annual lump sum contributions from their paychecks or monthly deposits. Employers can make contributions on behalf of their employees giving the employer an added tax deduction and the employee a valuable benefit of helping to reduce the high cost of health insurance.

For more information about HSA planning, feel free to contact us.